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How McDonald’s Outperformed Analysts’ Same-Store Sales Growth Estimates

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Same-store sales growth

Expressed as a percentage, SSSG (same-store sales growth) measures the rise in revenue from a company’s existing restaurants over a certain period of time. Specifially, SSSG is driven by ticket size and traffic.

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1Q17 performance by segment

For 1Q17, McDonald’s (MCD) has posted overall SSSG of 4%, as compared to the analysts’ estimate of 1%. Its United States segment posted SSSG of 1.7%, as compared to the analysts’ estimate of 0.8%. In this segment, SSSG was driven by the launch of its classic Big Mac promotions, the expansion of its All Day Breakfast, and its national beverage value program, which offered coffee of any size at $1. Its rise in menu prices by 2% also contributed to the segment’s SSSG.

MCD’s International Lead Markets segment has posted SSSG of 2.8% for 1Q17. The momentum from the launch of its All Day Breakfast in the UK and Canada and price rise of 1.5% drove the segment’s SSSG. Initiatives to enhance customer experience, such as self-order kiosks and “Experience of the Future” restaurants, also contributed to this segment’s SSSG.

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Other markets

MCD’s High-Growth Markets segment has posted an SSSG of 3.8% for 1Q17, with strong performance coming from China. In Russia, the company had launched an “All for RUB 50 Value Platform,” which increased traffic for McDonald’s in Russia. The company’s Foundation Markets segment has posted an SSSG of 10.7%, with Japan posting a double-digit SSSG.

The company’s Foundation Markets segment has posted an SSSG of 10.7% for 1Q17, with Japan posting double-digit SSSG.

By comparison, Burger King, which operates under the umbrella of Restaurant Brand International (QSR) posted SSSG of -0.1% for the same quarter.

ETF exposure

Notably, investors can gain exposure to McDonald’s by investing in the Consumer Discretionary Select Sector SPDR Fund (XLY), which has 4.5% of its holdings in McDonald’s. XLY also has 3.5%, 0.87%, and 0.55% in Starbucks (SBUX), Yum! Brands (YUM), and Chipotle Mexican Grill (CMG).

Now let’s discuss McDonald’s unit growth.

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